IBM Corp cut its ties from one of its earliest ERP software applications this week, selling the source code to a third party that will continue to develop and support the software under its own brand name. IBM’s Copics is a manufacturing (MRP II) suite for IBM S/370 and S/390 mainframes that dates back to 1988. When IBM stopped selling the software in 1994, it outsourced the support of existing customers to a third party which eventually became known as The Fredrick Group; a Cumming, Georgia based provider of support, services for manufacturing ERP applications.

Under that relationship, TFG was able to support IBM’s customers and draw revenue from those services relationships, but when the group sold Copics software – which by this time included web- based enhancements TFG had developed on top – it still had to pay royalties to IBM because Big Blue owned the rights to the source code.

The agreement was clear-cut, said Mike Shields, VP of business development for TFG. We had to pay IBM if we sold any Copics licenses but any new products we developed, supply chain modules and so on, TFG got to keep the full revenues.

Shields said the problem came when TFG started to think about the ASP model. While giving IBM a percentage of sales revenues had been a simple task, calculating how much to give it on a rented basis – when the Copics software is being hosted and offered as a bundle with other products – was another thing. It all becomes very murky in an ASP environment where you’re charging a monthly fee for use of a set of applications, Shields said, not owning the underlying code didn’t make a whole lot of sense to us.

Under the agreement, IBM sold TFG the full rights to the Copics source code, for an undisclosed sum. Along with the code, TFG gets its hands on IBM’s 100-strong customer base, which Shield says the company will now work aggressively to expand.

Copics is similar to IBM’s MAPICS MRP II software for AS/400s, which IBM spun out in the early 1990s. It runs on top of IBM’s IMS flatfile data base management system and works with its CICS transaction monitoring software. At present, the software only runs on NT, AIX and S/390, but Shields said TFG would now work to port the software to all the other leading platforms including Sun Solaris, HP-UX and Linux. á